Introductory Statement to the Board of Governors

by IAEA Director General Dr. Mohamed ElBaradei

Vienna, Austria

Technical Cooperation

In 2008, the focus of the Agency´s technical cooperation programme - which is developed and implemented with the involvement of all departments - remained on capacity building, an area where the Agency has a unique comparative advantage, as well as on regional cooperation and partnerships with UN and other multilateral agencies.

As the Technical Cooperation Report for 2008 shows, human health remained the largest area of activity last year, accounting for over a quarter of all TC spending. In Africa, for example, our support for Ghana, delivered with the backing of PACT, helped the Government to mobilize funding from a range of partners for a complete national cancer control programme. In Asia, several projects focused on strengthening nuclear medicine and diagnostic techniques for the management of cancer, with an emphasis on establishing cyclotron and positron emission tomography centres.

Capabilities in nuclear medicine to detect complications of diabetes were strengthened in several countries. In Mauritius, the prevalence of poorly controlled diabetic illness has decreased noticeably as a result of the adoption of a more effective intervention approach for management of the disease. In Latin America, two projects to improve nutrition were completed; one was related to reduction of childhood malnutrition, the other was on prevention and control of iron deficiency anaemia.

The second largest area of TC activity last year was food and agriculture. In Latin America, projects focused on activities to increase food quality and expand production, resulting in more rural jobs and a cleaner environment. In the Europe region, soil erosion and land degradation were addressed, for example through a project in Tajikistan to promote soil and water conservation techniques as part of a major UN-led undertaking on sustainable land management.

Safety was the third main area of activity, with the emphasis on management of radioactive waste, particularly in Europe and in Asia and the Pacific. In Central and Eastern Europe, for example, the Agency assisted countries in the operation of centralized waste processing and storage facilities.

The Technical Cooperation Fund totalled $79.9 million in 2008, with a rate of attainment of 94.7%. However, the continuing decline in the value of the US dollar has affected the purchasing power of the Fund. We hope in future to receive approximately 40% of the contribution to the TCF in euros, in line with recent payment patterns.

Implementation of the TC programme is a shared responsibility between the Secretariat and Member States. In the 2007 TC Report, several issues that affected implementation rates were highlighted, such as denials of shipment, customs delays, and onerous security clearance procedures which hamper our efforts to place fellows and scientific visitors. Unfortunately, these issues remained a problem in 2008, and it is becoming clear that implementation rates may drop further in 2009. It is essential that Member States and the Secretariat work together to ensure that obstacles to implementation at the national level are dealt with and that Member States have the capacity to implement the work plans.

Nuclear Applications

I am pleased to note that the WHO-IAEA Joint Programme on Cancer Control was launched last month. This partnership with the World Health Organization is important for ensuring a coordinated approach to combating cancer in developing countries. At the core of the joint programme are the comprehensive country reviews conducted by PACT and its partners, which have proven valuable in mobilizing resources.

FAO/IAEA Joint DivisionAs you recall, I reported to the Board in March 2008 that the FAO had served notice of its intention to terminate the FAO/IAEA Joint Division of Nuclear Techniques in Food and Agriculture. Following extensive consultations by the Secretariat with the FAO Secretariat and with the Member States of both organizations, I am pleased to inform you that the Agency has received a letter from the FAO announcing that the notice of termination is being withdrawn. This is a very welcome development, which means that this valuable 45-year-old partnership will continue. Through the Joint Division, we have pioneered the use of nuclear techniques to make food crops more resistant to disease, to boost crop yields and to develop tools for the control of major infectious animal diseases, some of which, such as Avian flu, are also a risk to human health.

Nuclear Power

The Agency organized an International Ministerial Conference on Nuclear Energy in the 21st Century in Beijing in April, which was graciously hosted by the Chinese Government. This was the first high level nuclear power conference since the start of the global financial crisis. It was significant that no country reported any scaling back of its nuclear power expansion plans. We are aware that some companies and countries, notably South Africa, have postponed near-term construction plans for nuclear power, but the important message for the Agency from the Beijing Conference is that we should expect continued high demand for our assistance from Member States exploring the nuclear power option.

Nuclear Safety and Security

I am concerned about a recurrent discussion among some Member States on whether nuclear security is a core function of the Agency. The global regime for nuclear safety and security is an essential enabler for the further development of nuclear technologies. Risks will always exist in the nuclear field, as in all human endeavours, and we must work to identify and reduce these risks - whether of accidents, in the case of nuclear safety, or intentional acts, in the case of nuclear security. The IAEA´s Fundamental Safety Principles have long recognized that safety and security measures must be designed and implemented in an integrated manner. At a time when security risks are growing, it would be irresponsible for the Agency - and incomprehensible to the public - not to have a robust, well funded and independent nuclear security programme.

Verification of Nuclear Non-Proliferation

Status of Comprehensive Safeguards Agreements and Additional ProtocolsYou have before you a draft comprehensive safeguards agreement and small quantities protocol for Rwanda, and draft additional protocols for Rwanda and Serbia.

There are still, however, 26 NPT non-nuclear-weapon States without comprehensive safeguards agreements for which the IAEA cannot draw any safeguards conclusions. Since the Model Additional Protocol was approved in 1997, you have approved additional protocols for more than 130 States. Additional protocols are, however, in force for only 91 States. There are 20 States which have significant nuclear activities but no additional protocol in force. As you know, the Protocol is central to the Agency´s ability to verify the absence of undeclared nuclear material and activities.

Also, I ask those States with small quantities protocols that have not yet done so to amend their SQPs without delay.

Enhancing Capabilities of Safeguards Analytical ServicesThe Agency´s project for Enhancing Capabilities of Safeguards Analytical Services is progressing with regard to the conceptual planning and design of new laboratories. Tendering for the ultra high sensitivity secondary ion mass spectrometer has begun and the Agency plans to complete its installation in the new laboratory space by the end of 2010. I am grateful for the voluntary contributions pledged by a number of countries to upgrade our Safeguards Analytical Laboratory (SAL), but must point out that we remain considerably short of the funding target, particularly to address safety and security issues associated with the nuclear material laboratory at SAL. I should stress that this situation would not have arisen had the Agency had a major capital investment fund with accumulated resources.

Safeguards Implementation Report and Safeguards Statement for 2008You have before you the Safeguards Implementation Report for 2008. The Agency implemented safeguards agreements in 163 States last year. For 51 States with both a comprehensive safeguards agreement and an additional protocol in force, the Agency was able to conclude that all nuclear material remained in peaceful activities. The Agency is working steadily to reach the same conclusion with respect to all other States with comprehensive safeguards agreements and additional protocols in force.

Application of Safeguards in the Democratic People´s Republic of KoreaAs I reported to you on 16 April 2009, the DPRK informed the Agency that it had decided to cease all cooperation with the IAEA, to request IAEA personnel to remove all Agency containment and surveillance equipment from the Yongbyon facilities and to require Agency inspectors to leave the DPRK.

I am greatly concerned at subsequent news of a second nuclear test by the DPRK last month. I deeply regret this, particularly at a time when the prospects for progress on nuclear disarmament are far better than they have been at any time in the recent past. This is a wrong step in the wrong direction which has again created an environment of confrontation. I call on all parties to continue to work for a comprehensive solution through diplomatic means that would bring the DPRK back to the NPT and address its security concerns, humanitarian needs and other political and economic requirements.

Implementation of the NPT Safeguards Agreement in the Islamic Republic of IranYou have before you my report on Implementation of the NPT Safeguards Agreement and Relevant Provisions of Security Council Resolutions in the Islamic Republic of Iran.

The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran. Regrettably, however, Iran has not implemented any of the measures called for by the Security Council and by the Agency´s Board of Governors. And there has been no movement by Iran on outstanding issues which need to be clarified to exclude the possibility of military dimensions to Iran´s nuclear programme. As I mentioned before, without implementation by Iran of the additional protocol and the required safeguards measures, as well as the clarification of outstanding issues, the Agency will not be able to provide assurances about the absence of undeclared nuclear activities in Iran.

I am encouraged, nonetheless, by the new initiative of the United States to engage the Islamic Republic of Iran in direct dialogue, without preconditions and on the basis of mutual respect. This gives reason for hope that a genuine dialogue may lead to a comprehensive settlement of many security, political and economic issues spanning over 50 years. A key element of such a settlement should be arrangements for Iran to exercise its right to use nuclear energy for peaceful purposes, while providing the necessary assurance to the international community about the exclusively peaceful nature of its nuclear activities. I hope that Iran will respond to the US initiative with an equal gesture of goodwill and trust-building. This could include implementing again the Agency´s design information requirements and applying the provisions of the additional protocol. It is my hope that the dialogue will begin as soon as possible, perhaps with a "freeze-for-freeze" as a prelude.

Implementation of the NPT Safeguards Agreement in the Syrian Arab RepublicThe Agency has continued to investigate allegations concerning the destroyed building on the Dair Alzour site in Syria. Regrettably, the limited information and access provided by Syria to date have not enabled the Agency to determine the nature of the destroyed facility, nor made it possible for us to corroborate Syria´s assertions in that regard. In addition to the particles of anthropogenic natural uranium (i.e. produced as a result of chemical processing) found in environmental samples taken from the Dair Alzour site, anthropogenic natural uranium particles were also found in samples taken in 2008 from the hot cells of the Miniature Neutron Source Reactor facility in Damascus. The Agency needs to understand the presence and origin of the uranium particles found at both sites, which are of a type not included in Syria´s declared inventory of nuclear material.

I again urge Syria to be fully cooperative and transparent, to provide the additional information and documentation requested by the Agency and to grant access to other locations, including those relevant for the sampling of destroyed and salvaged equipment and debris from the Dair Alzour site. In the absence of an additional protocol with Syria, the Agency´s right of routine access to information and locations is circumscribed. However, I believe it would be clearly in Syria´s interests, if it wishes the Agency to corroborate its assertions, to provide the full transparency required to enable us to clarify all allegations and come to an early conclusion. We are ready to discuss with Syria any modalities for access to relevant sites that would ensure that confidential information is protected while enabling the Agency to perform its verification work.

I also call upon Israel to share with the Agency all the information which led it to use force against the Syrian facility without giving the Agency the opportunity to verify the nature of the facility before it was destroyed. I make a similar request to all other States which may have relevant information that could help the Agency to complete its assessment.

Assurance of Supply

The agenda for this meeting contains a proposal on establishing a low enriched uranium (LEU) reserve under Agency auspices, which I have put forward for your consideration, as well as a proposal from the Russian Federation in support of the idea of an assurance of supply mechanism. My proposal is rooted in the Agency Statute and envisages the Agency providing LEU as a fall-back service to Member States. The purpose of the IAEA LEU bank and of the Russian proposal is to provide assurance of supply over and above countries´ existing rights. It does not limit countries´ rights in any way but is intended to avoid a repeat of the type of disruption for political reasons seen in the past.

I would like to make very clear that my proposal for an Agency LEU bank should not be confused with separate, but complementary, proposals by myself and others for eventual multinational control of the nuclear fuel cycle. I remain a firm believer in the ultimate goal of multinational control of the fuel cycle as an important tool for strengthening the non-proliferation regime as we move towards nuclear disarmament. That would, in my view, require the agreement of all States, in the context of disarmament negotiations, on a universal and equitable mechanism to convert current and future enrichment and reprocessing facilities into multinational facilities. However, this is not the subject of the proposal on the agenda before you today.

The proposed Agency LEU bank would be a physical stockpile of LEU at the disposal of the Agency as a last-resort reserve for countries with nuclear power programmes which face a supply disruption for non-commercial reasons. It would give countries confidence that they can count on reliable supplies of fuel to run their nuclear power plants. The LEU would be available to countries in need on the basis of pre-determined non-political and non-discriminatory criteria. It would be accessible to all States in compliance with their safeguards obligations and would be subject to Agency safeguards. I stress again - no State would be required to give up any of its rights, including the right to develop its own fuel cycle.

The Russian initiative to set up an LEU reserve for the supply of LEU to the Agency is fully funded by the Russian Federation. It would guarantee the supply of LEU to the Agency for eligible Member States, also in accordance with predetermined criteria. It would complement the Agency LEU bank by making more material available to the IAEA. The Secretariat is ready at a later stage to present these two proposals in full detail for your consideration.

I should add that a number of other proposals are also being developed for future consideration.

Programme and Budget

Let me turn now to the proposed Programme and Budget for 2010-2011.

I repeat: the budget proposal which I provided for your consideration represents a sound and fully documented estimate of the resources required to deliver, in a credible manner, the programmatic activities you have requested.

Since the meeting of the Programme and Budget Committee, alternative proposals have been generated at the initiative of the Chair and Vice Chair of the Board. I, of course, recognize and appreciate all efforts to reach consensus. But it is disconcerting to note that, while Member States continue to demand more from us, many are reluctant to provide the corresponding resources.

The proposed Major Capital Investment Fund (MCIF) follows established best practice in the private sector and in other organizations to provide for capital requirements and is particularly important in a technology-based organization. It is a mechanism to help the Agency overcome the significant investment backlog resulting from more than two decades of zero growth policies. I am pleased to see broad support for this mechanism. But if funding for the MCIF is reduced to cover only immediate 2010 needs, the fundamental principle of prudent fund accumulation will have been undermined.

There have been requests for reductions by means of what some call "austerity measures." Keeping the Agency as lean as possible has been a management priority throughout my tenure as Director General. But it must be understood that travel and the use of consultants - now targeted for reduction - are an integral part of our programme delivery and cuts will come with the risk of delays or a reduction in the quality of our work.

Several years ago, external management consultants who authored the Mannet Report concluded that the Agency had identified all significant possibilities for savings and warned that a further focus purely on cost-saving would result in a reduction in the quality of our programmes and services. Let me quote from that Report: "The Agency needs to invest in change if it is to improve efficiencies and bring about savings. We believe that savings will come from the change management programme but not without investment of time and money."

In fact, as that Report made clear, the only way to achieve additional significant management savings is through the introduction of an Enterprise Resource Planning System - what we call AIPS. Although Member States recognized the merits of AIPS, it was only after protracted debate that sufficient funding was secured to initiate the first of the four phases of the project. Following that exercise, the Board last year directed that the funding for the remaining phases of the AIPS project be included in the regular budget. The proposal I presented to you did just that. In this same vein, the Commission of Eminent Persons last year drew attention to the Agency´s precarious financial position, calling for an immediate cash injection of 80 million euros for pressing infrastructure requirements.

Let me spell out some of the consequences which I fear if the Agency were to continue living within the constraints of an entirely inadequate budget. Our ability to maintain an independent nuclear verification system and detect possible diversion of nuclear material and undeclared nuclear activities is already at risk because, for example, our analytical laboratories are outdated and we lack sufficient access to satellite imagery. Without additional funding, this situation can only get worse.

Vulnerability to a repeat of a disaster like Chernobyl will increase if the drastic staff shortages in our nuclear safety programme are not addressed. The risk of terrorists obtaining nuclear or radioactive materials and using them in a potentially devastating attack will grow if the highly inadequate staffing and funding of our nuclear security activities are not dealt with. Our ability to meet the needs of developing countries facing growing hunger, poverty and disease, with all their implications for security, will be eroded unless more funding is made available through both the regular budget and the TC Fund.

In this context, the Annual Report for 2008, which is before this meeting, once again provides an overview of the wide range of subjects covered by the Agency´s programme and the specific and valuable results accomplished. It is your report to the General Conference and the Agency´s report to the General Assembly and the world, and I believe it clearly demonstrates the significant contributions we are making in both the security and development fields.

I am encouraged that a number of Member States, spearheaded by some major donors, acknowledge the need for a meaningful budget increase. The increase we propose is dwarfed by the magnitude and range of the risks the Agency has to address. The Secretariat is naturally aware of the impact of the global financial crisis. But I should point out that the zero growth policies have been with us for some 20 years - many of which were years of prosperity. The Agency can continue to struggle on with growing restrictions and increasing risk, watching the quality of its services erode, or, with adequate funding, it can make an effective contribution to non-proliferation, nuclear security and the scourges of poverty, hunger and disease. It is, of course, your prerogative to determine the size of the budget. But it is my responsibility to tell you that the consequences of inadequate funding could be dire.

Conclusion

Let me conclude on a note of optimism. With the recent commitment by Presidents Obama and Medvedev to seek a world free of nuclear weapons, starting with a reduction in the nuclear arsenals of their two countries, a new era of arms control has hopefully begun: an era that finally recognizes the linkage between nuclear disarmament and non-proliferation. There is also now a growing conviction, reflected in many important initiatives, that "Global Zero" is the best long-term option for our survival.

This new environment will certainly have a major impact on the role and mandate of the Agency. I earnestly hope that we will rise to the challenge and do our utmost in the service of humanity.